Singapore Tax Facts 2016

Transcription

1 Singapore Tax Facts 2016

2 Tax facts Summary Under the Singapore Income Tax Act, taxes are levied on the income of companies and individuals. In addition, there are goods and services tax and stamp duties. There is no capital gains tax in Singapore. The tax year, known as the year of assessment (YA) is from 1 January to 31 December. Tax is assessed on a preceding year basis. Individuals are taxed on income earned in the preceding calendar year. The income of a company is assessed to tax on a preceding financial year basis. Corporate Tax A company is liable to corporate income tax on a territorial and receipt basis. It is taxed on income accruing in or derived from Singapore, and foreign income received or deemed received in Singapore. However, a nonresident company that is not operating in or from Singapore is generally not taxed on foreign income received in Singapore. Under the onetier corporate system, Singapore dividends distributed from corporate profits are tax exempt and not subject to any withholding tax. Residence Status A company is a tax resident if its management and control are exercised in Singapore. The place of incorporation is not relevant. Page 2 of 8 Singapore Tax Facts 2016

3 Corporate tax Companies are taxed at a flat rate of 17% and are granted a 50% corporate income tax rebate from YA 2013 to YA 2015 and 50% corporate income tax rebate for YA 2016 and YA The cap for the rebate is $30,000 for YA 2013 to YA 2015 and $20,000 for YA 2016 and YA In addition, companies are entitled to the following tax exemptions on their chargeable income: Partial Tax Exemption (For all companies) First 75% exemption = $7,500 Next 50% exemption = $145,000 Full Tax Exemption (For newlyincorporated companies)* First 100% exemption = $100,000 Next 50% exemption = $100,000 The following conditions must be met: incorporated in Singapore (includes companies limited by guarantee); a tax resident in Singapore for that YA; and has no more than 20 shareholders throughout the basis period for that YA where all of the shareholders are individuals beneficially holding the shares in their own names or at least one shareholder is an individual beneficially and directly holding at least 10% of issued ordinary shares of the company *does not apply to companies incorporated on or after 26 February 2013 and whose principal activity is investment holding or developing property for sale. Foreignsourced Income A tax resident company can enjoy tax exemptions for foreignsourced dividends, foreign branch profits and foreignsourced service income received in Singapore, subject to the following conditions: the income is subject to tax in the foreign country from which the income is earned; the income is remitted from a country with a headline tax rate of not less than 15%; and the Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the Singapore resident company Capital Allowances Capital allowances are given in place of depreciation of fixed assets, which is not a deductible expense for income tax purpose in Singapore. In addition, companies can claim written down allowances for capital expenditures incurred on acquiring certain intellectual property rights. Productivity and Innovation Credit Scheme The Productivity and Innovation Credit (PIC) scheme allows companies to enjoy 400% deductions, subject to a cap, for six qualifying activities: Acquisition and leasing of PIC Information Technology (IT) and Automation Equipment; Training of employees; Acquisition and inlicensing of Intellectual Property Rights; Registration of patents, trademarks, designs and plant varieties; Research and development activities; and Design projects approved by Design School Council For YAs 2011 to 2018, all businesses will be eligible for the PIC, up to $400,000 for each year on each qualifying activities from their income. Businesses may pool the annual expenditure cap and claim a combined cap of $1,200,000 for the YAs 2013 to 2015 and YAs 2016 to YA 2018 respectively. Alternatively, businesses can choose to convert up to $100,000 of the qualifying expenditure to receive cash payout up to $60,000, with the condition that the business employs and makes CPF contribution for at least three local employees. The maximum cash payout will be reduced to $40,000 for qualifying expenditure incurred from 1 August Singapore Tax Facts 2016 Page 3 of 8

4 For the YA 2013 to YA 2015, companies will also receive an additional dollarfordollar matching PIC cash bonus. There is an overall cap of $15,000 for all 3 YAs combined. For the YAs 2015 to 2018, under the PIC + Scheme, the annual expenditure cap is $600,000 (instead of $400,000). A business will qualify for the PIC + Scheme if its revenue is not more than $100 million or it has less than 200 employees. These criteria would be evaluated on a group basis if the business is part of a group. The PIC scheme will be expired after YA Group Relief Group companies are allowed to transfer current year tax losses and current year capital allowances to another company in the same group. A group consists of a Singapore incorporated parent company and all its Singapore incorporated subsidiaries. Two Singapore incorporated companies could be members of the same group if one is 75% owned by the other or both are 75% owned by another Singapore incorporated company. The group companies must adhere to the same accounting period. Carryback Relief All businesses will be allowed a one year carryback of current year unutilized capital allowances and trade losses up to a cap of $100,000, subject to meeting the requisite conditions. Carryforward Relief A company can carry forward unutilized tax losses, capital allowances and donations to offset against future assessable income, provided there is no substantial change in shareholders and their shareholdings at the relevant dates (shareholding test). There must also be no change in the company s principal activities during the relevant dates in order to claim unutilized capital allowances. Unutilized donations can only be carried forward up to a maximum of 5 years. Tax Incentives Singapore has an extensive range of tax incentives that provide relief from specific provisions of the Singapore Income Tax Act. They are administered by statutory boards such as Economic Development Board, International Enterprise Singapore and Monetary Authority of Singapore. Following are examples of tax incentives available in Singapore: Pioneer status Development and Expansion Incentive International / Regional Headquarters Award Finance and Treasury Centre Tax Incentive Merger and Acquisition Scheme Page 4 of 8 Singapore Tax Facts 2016

5 Withholding tax Under the Singapore tax law, the following income paid to a nonresident company or individual is subject to withholding tax: Nature of Income Withholding tax rates Interest 15%* Royalties [1] 10%* Technical fees for services performed in Singapore 17% Management fee for services performed in Singapore 17% Rental or other payments for moveable property 15%* Remuneration paid to nonresident director 22% # Professional fee (of nonresident individual or foreign firm) 15% on gross / 22% # on net payment Public Entertainer 15% / 10%** Charter fees 0% Real estate investment trust (REIT) distribution of taxable 10% income to nonresident (other than individuals) * These rates are final taxes for operations carried out outside Singapore. For operations carried on in Singapore, 17% will apply to nonresident nonindividuals and 22% will apply to nonresident individuals. ** 10% applies for payment made during period from 22 February 2010 to 31 March 2015 # 20% prior to 1 January With effect from 28 February 2013, Singapore adopts the rightsbased approach to ascertain if a payment for the use of software and payment for the use of information or digitized goods constitute royalties. Where the owner derives business income from the transfer of a copyright and the user has merely acquired a right to use the software or information for personal consumption or for use in his business, such payment does not constitute a royalty payment and thus, withholding tax does not apply. 2 The above rates may be reduced under tax incentives or applicable Double Tax Agreements with Singapore. 3 Withholding tax is to be accounted to the Comptroller of Income Tax by the 15th of the second month following the date of payment to the nonresident. Goods and Services Tax The GST is a tax on domestic consumption in Singapore. Businesses with annual taxable supplies of over $1 million must register for GST. Goods and Services Tax Standard Rate 7%* Exported goods and international services 0% *Sale and lease of residential properties and financial services are exempted from tax. Singapore Tax Facts 2016 Page 5 of 8

6 Individual tax Individuals are liable to income tax on a territorial basis. Foreign sourced income received by an individual (other than from a partnership) in Singapore is exempt from tax. Interest income from approved banks in Singapore is not taxable. Personal reliefs are only available to resident individuals. Residence Status An individual would be treated as a resident for Singapore tax purposes if he normally resides in Singapore except for temporary absences or if he is physically present or exercises an employment in Singapore for 183 days or more in a calendar year. Concessionary tax treatment as a tax resident is available if he: is physically present or works in Singapore for a consecutive period spanning 3 calendar years; or works in Singapore for a continuous employment period of at least 183 days which straddle across 2 calendar years Individual Tax Income tax rates of residents: From YA 2012 to YA 2016 Chargeable Income Rate (%) Gross Tax Payable ($) $ 20,000 $ 10,000 $ 30,000 $ 10,000 $ 80,000 $120,000 $160,000 $200,000 $120,000 $320,000 $320, ,800 3,350 4,600 7,950 6,000 1,3950 6,800 2,0750 2,1600 4,2350 YA % tax rebate capped at $1,000 YA % tax rebate capped at $1,500 (taxpayers below 60 years of age as at 31 December 2012) 50% tax rebate capped at $1,500 (taxpayers 60 years of age and above as at 31 December 2012) Page 6 of 8 Singapore Tax Facts 2016

7 From YA 2017 onwards Chargeable Income Rate (%) Gross Tax Payable ($) In excess of $ 20,000 $ 10,000 $ 30,000 $ 10,000 $ 80,000 $120,000 $160,000 $200,000 $240,000 $280,000 $320,000 $320, Income tax rates of nonresident individuals: ,800 3,350 4,600 7,950 6,000 13,950 7,200 21,150 7,600 28,750 7,800 36,550 8,000 44,550 Taxpayer Nonresident employee Nonresident partner, nonexecutive director, sole proprietor, professional Tax Rate Higher of 15% or resident rates 22% (20% prior to 1 January 2016) Not Ordinarily Resident Taxpayer (NOR) Scheme To qualify for the NOR status, an individual must be a tax resident for that YA and a nonresident for the three consecutive YAs prior to arrival in Singapore. The status is valid for a fiveyear qualifying period and entitles the resident individual to the following tax concessions: Timeapportionment of employment income subject to tax based on the number of days spent in Singapore, provided he spends at least 90 days outside Singapore for business reasons and has Singapore employment income of at least $160,000 Exemption on the employer s contributions to nonmandatory overseas social security schemes or pension funds for nonsingapore citizens and permanent residents Stamp Duty Stamp duty is payable on all instruments relating to the conveyance, assignment or transfer of stocks and share in Singapore companies, as well as immoveable properties in Singapore. Stamp duty rates Transfer of shares 0.2% Transfer of real property: $180,000 1% $180,000 2% Over $360,000 3% There are additional stamp duties imposed on the buyer and / or seller on certain real property depending on factors such as the profile of the buyers and the duration of ownership by the sellers. Singapore Tax Facts 2016 Page 7 of 8

8 How we can assist If you need assistance or advice, we are here to assist you. Contact: Michelle Seat Director, Tax Advisory & Compliance Foo Kon Tan LLP D E Foo Kon Tan (FKT) group: Foo Kon Tan LLP Foo Kon Tan Advisory Services Pte Ltd Foo Kon Tan Corporate Finance Pte Ltd Foo Kon Tan Technology Advisory Pte Ltd Foo Kon Tan Transaction Services Pte Ltd Foo, Kon & Tan Consultants Pte Ltd Capital Governance (S) Pte Ltd 47 Hill Street #0501 SCCCI Bldg Singapore T F E W Foo Kon Tan LLP. All rights reserved. Foo Kon Tan (FKT) refers to the brand name under which Foo Kon Tan and its associated companies provide assurance, tax and advisory services to their clients, or refer to one or more service providers, as the context requires. Services are delivered by the respective entities. Foo Kon Tan LLP is a member of HLB International, a worldwide network of independent accounting firms and business advisers, each of which is a separate and independent legal entity and as such has no liability for the acts and omissions of any other member. HLB International Limited is an English company limited by guarantee which coordinates the international activities of the HLB International network but does not provide, supervise or manage professional services to clients. Accordingly, HLB International Limited has no liability for the acts and omissions of any member of the HLB International network, and vice versa. Page 8 of 8 Singapore Tax Facts 2016

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